National Microfinance Bank AGM

guest post in Swahili, submitted by Uchumi Wetu of NMB - a Tanzanian Bank

WANAHISA wa Benki ya NMB watapata gawio la jumla ya Shilingi 15.7 bilioni kwa mwaka 2009 (dividend payout of ~$11 million), ikiwa ni ongezeko la asilimia 4.7 ikilinganishwa na mwaka uliotangulia.

Mwenyekiti wa Bodi ya Wakurugenzi ya NMB, Misheck Ngatunga, amesema mgawo wa kila hisa kwa mwaka utakuwa Shilingi 31.40 (DPS of $0.02), ikilinganishwa na Shilingi 30 kwa mwaka 2008. Alikuwa anawasilisha ripoti ya mwaka 2009 kwenye mkutano mkuu wa mwaka wa NMB uliofanyika jijini Dar es Salaam mwishoni mwa wiki.

Ngatunga alisema mwaka 2009 ulikuwa wa changamoto nyingi kutokana na kuongezeza kwa ushindani katika sekta za benki pamoja na mtikisiko wa uchumi duniani, ambao ulikuwa na madhara makubwa katika uchumi wa Tanzania kama kwingineko duniani. Aliisifu serikali kwa kuandaa mkakati wa kukabiliana na mtikisiko wa uchumi kwa kuendeleza mfuko wa kuokoa na kusaidia sekta na taasisi zilizoathirika na mtikisiko huo. “Sekta ya fedha ya Tanzania kwa ujumla haikuathirika na mtikisiko huo, na iliendelea kuwa na mtaji wa kutosha na yenye faida. Ingawa athari hizo zilikuwa tofauti kwa kila benki.”Hata hivyo, alisema hali ya uchumi na kushuka kwa viwango vya riba vilichangia kushuka kidogo kwa mapato na faida mwaka 2009, ambapo benki hiyo ilipata faida ya Shilingi 68.04 bilioni (kabla ya kodi) (pre tax profit of $47 million), ikilinganishwa na Shilingi 70.94 bilioni mwaka uliotangulia. Upungufu huo wa faida ni kwa asilimia nne. Wakati huo huo, NMB imedhamiria kuboresha huduma zake na kupunguza msongamo wa wateja katika matawi yake nchini na kuwafikia Watanzania wengi zaidi wanaoshi vijijini.

Katika taarifa yake ya mwaka 2009, benki hiyo yenye mtandao mkubwa nchini imesisitiza kuwa itazingatia zaidi kupunguza muda wa wateja kusubiri katika matawi na ATM, pamoja na kuboresha mikopo. Mwenyekiti wa bodi ya wakurugenzi alisema pamoja na mafanikio mengi yaliyopatikana katika kipindi kipindi cha mwaka uliopita, ikiwa ni pamoja na kuongezeka kwa matawi na mtandao wa ATM kutoka 167 mwaka 2008 hadi 281 (now have 281 ATM machines) mwishoni mwa mwaka 2009, bado wanakabiliwa na changa moto nyingi, ikiwemo tatizo la msongamano wa wateja. “Nina uhakika kwamba uongozi na wafanyakazi wa NMB watafanikiwa kukabiliana na changamoto hizo,” alisema Ngatunga. Alisema NMB inakusudia kupanua zaidi mtandao wa matawi nchini ili kuweza kujikita zaidi katika msukumo wa ‘Kilimo Kwanza’, mpango wa kuboresha uzalishaji wa kilimo na sekta ya mabadiliko kwa nia ya mapinduzi ya kilimo.

Akizungumza katika mkutano huo, Mtendaji Mkuu wa NMB, Bern Christiaanse, alisema mtandao wa matawi ya NMB uliongezeka kufikia 133 mwaka 2009 (133 branches), huku matawi mapya nane yakifunguliwa mwaka huo. Alisema ongezeko hilo ni matokeo ya mkakati wa benki hiyo wa kutoa huduma za kifedha kwa watanzania wengi iwezekanavyo.Kwa mujibu wa taarifa ya mwaka 2009, jumla ya raslimali za benki hiyo zilikua kwa asilimia 20.6 kutoka Shilingi 1,384.3 bilioni hadi 1,669.3 bilioni, wakati ambapo mtaji wa benki ulikua kwa asilimia 20.4 kutoka Shilingi 159,689 milioni hadi Shilingi 192,239 milioni.

Taarifa hiyo iliyowasilishwa kwenye mkutano mkuu wa mwaka wa NMB ni ya pili tangu benki hiyo iwe kampuni ya umma baada ya kuorodheshwa kwenye soka la hisa la Dar es Salaam.

2010 Bank AGM's

a guest post by Kainvestor

Barclays Bank AGM:
Besides the ordinary issues of election of directors, approval of financial statements, dividends and director remuneration, there was also special business items on the agenda of amendment of articles to allow for electronic statements and transfer of dividends via mobile money.

As expected, shareholders approved everything and further approved selling the Bank's custody business, though some thought the bank was selling (itself) out to Stanchart.

Q&A
- Why a very big amount in non-performing loans and why are they not up-dated consistently every year? Response was BBK has loaned out over Kshs 100 billion and only about 2b have a paying problem, and most of them are secured so can still recover money by sale of collateral. They collected over kshs 200m from impaired loan accounts in 2008 and over Kshs 400m in 2009.
- What is the bank planning to do with loans secured by fake titles for grabbed land that the government is likely to repossess when the new constitution is passed? The bank doesn’t have such loans and if by bad lack such unfortunate events take place, they believe they will have recourse in the courts.
- Why is annual report font too small to read?
Future annual reports will have fonts that are legible to read
- Since the bank is making a lot of profit with ever growing retained earnings and they are selling the custody business, why can’t they give out more dividends and a share bonus?
Selling of the custody business will be concluded in October this year so money has not been paid to the bank yet. Even so the amount will be used for expansion of the bank. The bank has also been increasing the amount of dividend paid out considerably, by 25% this year from Ksh.2.0 in 2008 to Ksh.2.50 in 2009, and this will be the trend as the bank makes more profits. A bonus might be given next year if the business continues performing well.
- Why are Q1 results late and when are they going to be released? The bank is within the required reporting period and the results will be published Monday next week
humorous moment: Mama Helena, a 94 year old lady from Muranga, said (in kikuyu, translated by Director Judy Nyaga) that she’s too old to wait for the bonus next year and wanted the directors to give her bonus this year.This was supported by several old shareholders.
Goodies: a BBK labeled bag and packed lunch

Family Bank AGM:
... Got in late when they were discussing the only special business agenda. The bank was seeking shareholders approval to offer and allotment of unissued shares. This was approved, though one share holder asked if it meant that the bank would be going public on the NSE to which one director declined saying if that was the case shareholders will be informed first.... later got feeling that some shareholders are not for the idea to have the bank list on the NSE as they feel that they will loose out to new investors.

- Ng’ang’a Muchai retired after serving the bank for 26 years as a director.
- Goodies: a bottle of mineral water, cup of coffee/tea and snacks afterwards.
thanks Kainvestor, other guest posts are also welcomed

CFC Stanbic 2010 AGM

The CFC Stanbic Holdings annual general meeting (AGM) for 2010 was held on May 21 at the tented parking at CFC Centre, off Museum Hill, Nairobi. (twitter @Standardbankgrp)

The Managing Director re-capped the year’s performance of the group companies. CFC Stanbic (bank) had a flat profit of 1.9 billion [$25 million], CFC financial services (stockbroker) lost 108 million [-$1.4m], CFC Life (insurance) lost 433 million [-$5.6m] while Heritage (insurance) had a profit of 278 million [$3.6m]. He attributed the performance to impairment of the stock portfolio at the Nairobi stock exchange which declined by 60%, increased operating costs (New IT system, write-off old IT system, opening of new branches, and refurbishing/rebranding of all other branches) overall operating income was up 25% in 2009, but operating costs went up 46%. Finally, he added that the first quarter of 2010 has seen a good performance – with good earnings from forex and government securities, and the NSE rebound has good for their portfolio this year

Hot Button Issue: Poor performance of the Group /companies was cause for concern among several shareholders who asked questions citing:
- High operating expenses of 6 billion
- Item of ‘other expenses ‘ totaling 3.4 billion ($45 million) that were not detailed in the notes
-Ill-feeling, that when they approved the CFC Stanbic merger they were told that the group would have a leaner management structure would lead to cost savings across the group, and this has not happened
- Company used to be generous & give bonuses, but looking at the results, this is not going to happen any time soon!

In reply, the Board referred back to the MD’s earlier statement that had broken down the major cost items as well as the decline in the company’s NSE portfolio that had resulted in their auditors asking that they factor in an impairment provision of about 700 million while the others were the IT costs, advertising/branding branch refurbishment across the group, not just bank business.

Why new borrowing?: a corporate bond of 2.5 billion [$32.5m]was asked about. Notes also show increase loan from IFC of 759 million and new loans from other banks - NIC (200m) and CBA (500m). MD said the bond and loans were to support their mortgage business, which has been one of their better performing lines, and also support their subordinate capital position. .
(500m)

Banking sector fraud is high even as the group invests in new system and new products like electronic banking, there is a lot of fraud in the sector with customers losing their money to bank insider, and are Kenyan laws keeping up with new fraudsters. MD replied that the new system was safer.

Long-serving Chairman Exits: During director elections, the chairman Charles Njonjo announced that Mike Du Toit (long time Stanbic K MD), Titus Naikuni (MD of Kenya Airways) and himself who were all up for re-election were all stepping down, but added that Du Toit would take up other responsibilities within the group. On his part he thanked shareholders for their support though the years and said he was proud that the company that he, Jeremiah Kiereini (fellow powerful director), and PK Jani had started many years ago had grown into a conglomerate which now had undergone many recent changes and there were many new faces (and more women) who did not know his face, He said Kiereini , who will remain on the board for a few more years, would look after his interests but that he would still be around next year, as a shareholder on the floor, to ask questions of the board. Re-elected directors were Eddy Njoroge (Kengen MD), Fred Ojiambo (Nairobi lawyer), Jane Babsa-Nzibo and Greg Brackenridge who will be the new Bank CEO?

Bonus at next meeting: an extraordinary general meeting of shareholders will be called later in the year to approve the hiving off of the insurance business (CFC Life and Heritage) into a new company (in a deal with Liberty Holdings & African Liaissons Consultants)that will also be listed on the Nairobi Stock Exchange. Current CFCStanbic shareholders will receive a dividend in specie of 1 share of the new company for every 1 CFC share they currently hold, at no additional cost.

Goodies: - lunch box (flat rice & chicken piece), soda, umbrella (which I lost an hour later)
- scary? annual report was 114 pages long without as ingle picture or CSR fluff page. Shareholders also, after several questions, approved a motion allowing the company to publish account sin the newspapers, have it on their website or e-mail it to shareholders in lieu of having to print and mail one to every shareholder.

Internet Security in Kenya

On May 19, Internet Solutions (IS) and Africa Practice hosted a forum on internet security at Intercontinental Hotel for large corporate customers of IS. Speakers included Loren Bosch sales director East Africa at IS, Jason Finlayson of Security Risk Solutions and Collin Mamdoo C. O. O. for East Africa (twitter @collincrm) at IS.

Loren introduced Internet Solutions (IS ) which provides a holistic security solutions which include (they are) cloud-based (hosting, security, back office) connectivity (VPN, fixed & mobile broadband), communication (voice, video, hotspots), and carrier (satellite, last mile fibre & wireless) services In terms of fibre they are a big investor in the Seacom cable. Loren mentioned that most Kenyans experienced a week of slow internet in April 2010 as maintenance work was carried out on a cable that links both the Seacom and TEAMS cables to Europe; however their clients were not affected as IS is also linked via West Africa’s SAT 3.

Jason whose company Security Risk Solutions provides security risk solutions (assess ricks, investigate, fix, help prosecutions etc.) in Kenya and Uganda talked about the state of internet security in Kenya terming it immature, the country has not been exposed to cyber crimes, until now. Kenya has enjoyed security by obscurity as slow network speeds kept the country off the radar and limited the ability to tamper with computers here, – until now with the advent of fibre cable Kenya which mean much faster speeds.

Kenya is:
- Weak in security architecture, processes, and crisis solutions which are all relatively new /immature. There is no regulatory framework to protect customer information, no regulatory compliance, no privacy laws, and big companies are struggling with IS basics.
- CCK is yet to set up a computer emergency response team (ERT) though it is has been budgeted for. Also, our cyber police unit was disbanded two years ago (but has recently been re-activated) and the police do receive some training – while neigbour Uganda Police has an actual electronic counter-measures unit.
- Perpetrators’ are sometimes prosecuted for fraud, but not for hacking or other lesser computer crimes

Its going to get worse in the short run with better fibre speeds and employees with laptops and internet access at home, but do large companies care about security?
- Fibre has brought broadband access and many opportunities for Kenyans, but while fibre means we can do anything, people can do anything to you i.e. (banks/corporates)
- Corporates are aware of this, but often don’t have the budget to implement, or the knowledge disseminated across. The Central Bank of Kenya tied to mandate all banks to have BCP’s a few years ago, but many just downloaded from the net and put their logo on them.
- Computer viruses spread much faster now. In 2009 one virus infected 12 million computers worldwide in 24 hours. And with better access, we can expect more phishing attempts in Kenya – already in South Africa, in the first four months of 2010, they have shut down 400 phishing sites
- The FBI report on the top 10 sources of computer wrongdoing is headed by the US and UK, but with 4 of the top 10 countries being in Africa (Nigeria, Cameroon, Ghana, South Africa), the odds are that in two years, Kenya will join this infamous list

- Also Symantec 2009 report for top attacks listed common ways of malicious attacks such as suspicious PDF’s vulnerability of Internet explorer and media player. Symantec have set up honey pots in Kenya to better study these attacks from 2010. [source report]

SRS found internet security risks at three levels
- People: weak passwords easily deciphered by hackers, staff use portable media, accept social invitations to download files/attachments, share USB sticks, and are vulnerable to social engineering, etc. an example was given of a tester sitting at an empty desk of a worker, calling the IT department and having a password reset over the phone giving them access
- Processes: no app segregation, no use of audit trails, poor controls/security standards. e.g. bank that lost money to fraud had assigned the system admin user name to 50 people
- Technology: companies remain vulnerable because they don’t install patches e.g. to Internet explorer/other popular software some of whose fixes have been around for years. Besides poor patch management, employees now access networks from multiple locations and use more social media at the workplace.

Solutions include:
- Limit systems privileges
- Turn off /remove some internet services
- Test security regularly and practice emergency drills
- Have intrusion detection systems
- Install patches
- Train employees and train bosses
- At the worst companies can pull ban computers or block social media, gmail/hotmail, but that will hamper service deliver. He ended with a quote attributed to a Toyota executive who said that there is no perfect security, only appropriate levels of insecurity

Colin summed it up with a report on new vulnerabilities in the systems
- Social media attacks will be the story in 2010 e.g. hackers using invitations through twitter, skype facebook
- Not just computer but also physical e.g. men in south Africa kidnapping girls they had 'met' through MixIt
- SMS attacks - He landed at Nairobi airport and got an SMS from his Zain line that he had won Kshs 250,000, all he had to do was reply to a number to collect his money
- Attacks across different platforms - while Microsoft is the most hit platform, others like Mac are also being targeted e.g. vulnerabilities have already been reported with the new iPad
- Faster spreads – e.g. zero day viruses. As soon as vulnerability is found, hackers exploit it before a patch can be availed. More hacks? There are videos on youtube that teach newbie’s how to hack
- Security needs to be multi-layer, firewall, anti-viruses, mail filters etc.
- Inside attacks: worst threats /most serious are from disgruntled employees with technical and process knowhow within companies – solution? Pay them their bonuses

EDIT: Pal Kahenya is looking for the best hacker in Kenya and has offered a prize of Kshs 100,000 (~$1,300) to the winner of his challenge.

Shares Portfolio May 2010

A rising tide lifts all boats

Tracking changes from three months and a year ago

The Stable

Diamond Trust ↑
Kenya Airways ↑
KCB ↓
Scangroup ↑
Stanbic (Uganda) ↑
Uchumi ↔
Performance: Portfolio is down 2% in value from February after exit from Safaricom which was about 10% of Portfolio, while the NSE is up 18% since February 2010
In/Out: Exited Safaricom completely, after accumulating shares since the 2008 IPO. One of the most liquid stock at the NSE, with lot of foreigner interest, and one I will buy back later
Increase/decrease: None
Best performer Diamond Trust and Scangroup, each up 23%
Worst performer: KCB down 6%

Events
Unexpected Gains/Losses
- Uchumi lifting itself out of receivership and applying for re-listing at the Nairobi Stock Exchange
- The communication spat pitting Safaricom versus the three other mobile companies, and another Scangroup buyout deal, both featured in this post here.

Other events
- The Housing Finance merger dance with Equity Bank here
- Another share split announced by Kenol Kobil (2nd time in six years)

Looking forward to
- Dividend payments expected from Diamond Trust, KCB, Scangroup, Stanbic (Uganda)
- @coldtusker says to watch kapchorua Tea at 140, Kenol at 93.5, Kenya Airways 56, and KPLC 185 and compare 6 months from now while Riba Capital is watching tea stocks, KPLC and Housing Finance.

KCB 2010 AGM

Excerpts from a few minutes spent at the annual general meeting of KCB - Kenya’s largest bank that was held on Friday May 7 at KICC

Summary
Good: they have styled up - gave packed lunches, had registration points spaced out so no crowds/ queues squeezing and interrupting the meeting
Bad; timing is an issue, it was one hour before the auditor finished and the Chairman opened floor to questions - ok they may have a large crowd (5,093 attended the last AGM), but still!

Shareholder Q&A
Annual report was not circulated: copies were given to shareholders as they walked in so some said they had reviewed them. Why even print glossy copies which will be thrown away after AGM (print on plain paper instead)? Why not avail copies at bank branches nationwide?
CEO replied Last year shareholders approved this new measure – and the bank will no longer be sending out annual reports to its 170,000 shareholders – an exercise that was costing them about 30 million (~$390,000) each year. They printed fewer copies this year, but will look at other ways to get it out faster such as e-mail [note: it’s been available at their site for about a month, but few shareholders went and downloaded PDF]

Raise Capital: this happened later with the shareholder approval to raise about Kshs 15 billion (~$200 million) - CEO said after growing at about 20-30% p.a. they needed more capital as a regulatory requirement to continue to take in more deposits and lend out money. Their goal is to raise 21 billion over next few years and balance may be from bond.

Are subsidiaries profitable? (information missing from accounts)? CEO pointed out the information was in the account notes, but said many subsidiaries were in infancy after massive investment in people, technology, marketing and were still not profitable, asked for more time for them to achieve payback [A/R notes showed KCB Tanzania lost 141 million, KCB Uganda lost 438 million, KCB Rwanda lost 273m, while KCB Sudan made a profit of 84 million ]

Open more branches in under-served areas CEO said they have slowed down on this in 2010, they have attained branch network of 210 (168 in Kenya) and 650 ATM’s (including partners) . however where they see a need , they will expand their footprint.

Poor customer service: some shareholders companied about poor service at KCB branches, one said their staff had not kept pace with technology while another noted that staff still think they are working for a government agency. Chairman said they have noted the comments

Ernst & Young have been auditors for a long time is that prudent , or are you stuck with them? yes E&Y have been their auditors since 1989, there is no requirement for company to rotate auditors, though management has noted the point. CEO also mentioned that CBK requires that the lead partners is rotated and that has been the case at E&Y partner who handles KCB

Shareholders companied about no SWAG this year to which CEO said they had reviewed costs of AGM and decided to focus on dividend; they still gave lunch to shareholders who showed up; they handed out (ahead of meeting) - a brown bag packed lunch (from Tintin Restaurant) with chicken drumstick, sausage, potato crisps, boiled egg, banana, soda

Other bank happenings
- Separately another bank Standard Chartered today announced a rights issue to raise capital from shareholders(estimate 3 – 6 billion targeted)
- I&M Bank will give 10 scholarships to Strathmore business students enrolled in 4 year BBS in actuarial science, finance or financial economics. Application deadline is May 31
- Stanbic Bank has an Africa Graduate development programme - apply here
- Equity Bank Pre-university sponsorship program wil benefit 200 of Kenya's top high school graduates - details here

New Media Companies Redux

It’s been two years since this blog post comparing Access Kenya and Scangroup which debuted at the Nairobi Stock Exchange (NSE) at about the same time. They are both back in the news this week for diverse reasons along with a third ‘new media’ company Safaricom, which debuted later in 2008 on the NSE.

Scangroup: has just announced plans to buy stakes of 51% in Ogilvy & Mather Africa and 50% of Ogilvy East Africa. (statement here) - two companies are both subsidiaries of UK’s WPP Group who own 27% of Scangroup.

The investor at the Scangroup notes that group has recorded growing ads in TV and radio but declining in print media. In 2009, the communications sector was their largest customers with 29% followed by finance at 15%. Scangroup has 61% of advertising market in Kenya followed by Access Leo Burnett with 13% and then Ogilvy & Mather with 10% - while their plans going forward are to do more online adverting and take the Ogilvy as their main brand across Africa

a version of this Safaricom by Squad digital, a Scangroup venture appears in the NY Times pages

Access Kenya: are in the news (details here) following their postponed by another three months of the annual general meeting that was to have taken place yesterday May 4 and payment of their divided. The company has not commented beyond a press statement.

From the blogs: On AK - a year ago, they were very very liquid while as recently as two months ago, they were hailed as a must buy stock.
from Twitter @bankelele not a shareholder, but as a concerned proxy lack of info is bad. AK should issue a profit warning or cautionary statement on restructuring
@mainaT I figure if AccessK is struggling now when internet is a growth sector, its got issues & a cash flow problem that won't go a way 4 a while…but, Centum did the same in late 08 early 09 when it was having Cflow issues that meant it couldn't pay a dividend
@roomthinker: Access Kenya customers, used to their speeds were not surprised to learn their AGM would be late
@coldtusker Y announce a dividend if u have CF shyte? For AK to say, 'no div coz expanding' is easy & plausible. Or pay only 5 cents like safcom…I think this is a bigger issue... Sold off at 22 so dont really care but I think they are in play. AK cud always delay div after AGM…I think less of cashflow issue. More of a acquisition/takeover/sale matter http://bit.ly/aJVCMm [#nairumours]

Finally we have Safaricom who initiated a spat with the government [statement here] after the Minister for Information (gazetted new rules for the sector including a fair competition one (draft here) and accusing the government regulator, Communications Commission of Kenya (CCK) of seeking to curtail safaricom’s growth through price controls and to allow competitors to increase their market share.

The next day the three other mobile companies, Yu, Orange and Zain replied in joint statement applauding the new rules and saying they were not targeted at anyone (read Safaricom) but anyone who abuses of a dominant position in the market CCK had adopted international practices to bring real competition to the mobile sector.

This is new ground for Safaricom – when Orange raised a fuss about the uncompetitive Kenyan market, it looked like GoK would side with large taxpaying Safaricom, but now that all the small (unprofitable, they admit) new mobile entrants have teamed up, some token measures are likely to be brought to rein in Safaricom which is estimated to control at least 80% of the mobile sector by most measures. How do you bring down Safaricom from 80% to 60%?